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Hanover council bails out Bluewater Radio with quarter million dollar building purchase

Suffering financial difficulty and on the verge of closing, Hanover council has decided to save Bluewater Radio (BWR) by purchasing the downtown building the station is housed in for $246,000.

In a special council meeting ahead of the committee-of-the-whole meeting on Oct. 2, Hanover CAO Brian Tocheri presented a report detailing the situation BWR faces. Council not only passed a by-law to purchase the building at the full appraised value, but also passed a by-law to execute a lease agreement that will allow BWR to occupy the building rent free until the end of 2019.

In the report, Tocheri stated the BWR board approached council earlier this year and advised them of the non-profit community radio’s financial difficulty.

On June 12, council discussed BWR’s financial and other challenges at a special closed council meeting. When asked by The Post why the session was closed, Tocheri said it was permitted as per a section of the Municipal Act regarding discussion of a proposed or pending acquisition or disposition of land by the municipality.

Tocheri’s report stated during that June meeting, council agreed that assisting BWR to become sustainable for the long term was worth the effort, however, council was cognizant the municipality cannot be BWR’s only, or even main, partner.

Tocheri said after serious consideration, council and the BWR board agreed to pursue an immediate solution to its financial challenges and to plan for the long-term sustainability of the station.

The main terms of the agreement are as follows:

- The municipality will purchase the building from BWR based on its appraised value. BWR is to use the proceeds from the sale to first pay off its existing mortgage on the building in full. Based on BWR’s actual and projected annual budgets, it is anticipated that the equity from the sale of the building will provide sufficient funds for BWR to operate until Dec. 31, 2019.

- The town will provide BWR $20,000 in funding for each of 2018 and 2019 as per its current agreement. BWR will be allowed to occupy the building rent free, but will pay all heat/hydro, phone and other operating costs until Dec. 31, 2019. A lease with the municipality will be required.

- BWR will amend its by-laws to reflect the board consisting of seven members, four of whom will be appointed by the municipality. One of the main objectives of the board will be to develop a plan for its long-term sustainability, including building its revenue base.

Tocheri said by Dec. 31, 2019, council will have several options available for its consideration, one of which may include selling the building.

After Tocheri presented the report, Coun. Rick Hopkins wanted confirmation of one noticeable omission from the report, which was the purchase price of the building.

Tocheri confirmed it was $246,000, and director of corporate services Christine Walker said payment will come out of town reserves.

The purchase and lease agreement by-laws were each read a first, second and third time and passed on Oct. 2, however, the vote was not unanimous as Hopkins opposed the by-laws. Deputy mayor Selwyn Hicks was absent from the meeting and did not vote.

In an interview after the special council meeting, Hopkins said he is in favour of supporting BWR, but is not in favour of supporting to the extent of purchasing the building at full-appraised value.

“Buying their building was an extreme effort,” Hopkins added.

The radio station is on the main floor, and Tocheri said the second floor is a residential apartment that is currently occupied by BWR CEO and station manager Andrew McBride.

When the town becomes the landlord, they will not charge rent on this space.

Hopkins said, “We won’t be taking any rent from the building at all as I understand it.”

BWR was established in 2001 with seed money coming from the town and the Ontario Trillium Foundation. The station first started broadcasting with a five-watt developmental licence from a small rental space in the basement of 275 10th St. In 2006 the station was granted a full 250-watt licence.

In October 2007 BWR moved into its present location at 267 10th St. after purchasing the building from Karl Blum. The listing price of the building in 2007 was $139,900.

McBride said it was never BWR’s intention to get into the property business.

“With the Town of Hanover taking ownership of the building, this frees up capital and reduces the operating costs, which will be used for the operation and development of the station to the benefit of Hanover and the surrounding area,” McBride said. “When the building was acquired back in 2007, the Bluewater Radio board decided, should the radio station ever close, all the proceeds from the sale of its assets should be gifted to the Town of Hanover. Without the Town of Hanover’s assistance, BWR would not have had a community radio station.”

Hanover mayor Sue Paterson said it was important to council to help the station remain in Hanover because it was felt it would be a loss to the community if it closed.

“Bluewater Radio is an important part of our community and serves an important communications role,” Paterson said. “This agreement was determined so that the station has the opportunity to become self-sustainable, thus reducing the funding required from the municipality.”

Coun. Steve Fitzsimmons, who co-hosts Hockey Talk and Baseball Talk on BWR, said the station provides a platform for Hanover and area people to talk about Hanover and area issues on a radio medium, which really doesn’t exist in this form anywhere else.

“It’s our station, and if we lose it, we will never get it back,” Fitzsimmons added.

Although not wanting to lose the station, Fitzsimmons said council was concerned about committing additional taxpayer dollars to the situation.

“We ended up finding a way that mitigates that by purchasing the BWR building for fair market value, and allowing them to use the equity in their building to ensure operations for an additional two years,” Fitzsimmons said. “The building will appreciate in value and we’ll ultimately sell it for a profit, so taxpayers can feel good about that investment.”

As part of the purchasing terms, council will continue to provide BWR $20,000 in funding in each of 2018 and 2019, which Paterson said is an extension of an agreement that has been in place since 2013.

Tocheri said, “In return for the funding, there are a number of BWR covenants. Some of the covenants are that there be no-charge public announcements, specific programming and live broadcasting, emergency broadcasting and other advertising opportunities.”

When McBride was asked what the $20,000 usually goes towards, he said, “The station is a recognized teaching facility for high school co-op students, who wish to pursue a career in broadcasting or the media. The annual grant from the Town of Hanover goes to support these programs, and also maintain and update broadcast equipment.”

Also as part of the agreement between the town and the station, BWR is to amend its by-laws to reflect a seven-member board, four of which will be municipality appointed, so some current board members will be let go.

“The three Bluewater Radio board members who will remain are Gary Smith, Joel Axler and Craig Smith,” McBride said. “I believe the mayor will announce the four council appointees at the council meeting on Oct. 16.”

Hopkins said with having four municipal representatives on the board, council will have more control in directing BWR in the right direction, “and we need to have that control.”

Paterson said, “The board of directors primary objective is to become self-sustainable. A strategic plan followed by a business plan would be the first order of business for the board.”

In order to become self-sustainable, the non-profit community radio station faces many challenges, and Fitzsimmons said there has been a revenue problem at BWR.

“It has been in part because there has been a significant turnover of salespeople over the last couple years,” Fitzsimmons said. “Advertising sales is in part a relationship-building business. No salesperson has stayed long enough recently to build that rapport and trust with customers. That has impacted advertising sales directly.”

McBride said advertising at the community radio station is tougher than advertising at the commercial radio stations as community radio stations are federally mandated to provide local programming for everyone from ages nine to 90.

“Unlike commercial radio stations, we are not permitted to target a certain demographic and only service that market,” McBride said. “This is a real challenge when trying to generate advertising revenue. Most commercial stations air a single format targeted towards certain groups within a demographic. This is the way advertising is marketed.”

Another difficulty with advertising is not being able to show the station’s audience numbers.

“Community stations do not subscribe to rating analysis, which are used for commercial marketing purposes,” McBride said.

Paterson added, “While commercial radio derives its operating revenues from selling advertising, community radio stations need alternative sources of funding to survive, including subsidies and donations.”

BWR regularly receives donations from community groups such as the Hanover Rotary Club, local legions and also individual sponsors.

Fitzsimmons said he is confident the new board will help provide a good future outlook within the next two years to keep the station going beyond 2019.

“I think it’s fair to say that we have an action plan moving forward on how we can help the situation stabilize itself financially,” Fitzsimmons said. “It has been sustainable in the past, and we believe with proper help, it can and will be again.”